Construction output inched up by 0.1% in the third quarter of the year according to the latest ONS data, propped up by private new housing; however a closer look at the figures suggest investors are hesitant and the housing market is faltering.
The increase, however, was a meagre 0.5% in the three-month on three-month series in August 2019. It was driven by private new housing, private commercial and public new housing, with rises of 1.0%, 0.9% and 3.6% respectively.
Since the record high of £13,869 million recorded in the monthly all work series in February 2019, the industry has experienced a mixed profile of monthly growth, with falls in March, April and June largely offset by increases in May, July and August. The level of construction output in August 2019 is now £123 million below this record high.
There was a month-on-month decrease in new work of 0.2% in August 2019. The sector experienced a mixed profile of growth, with public new housing (3.3%) experiencing an increase and private new housing (0.9%) seeing a fall.
Matthew Pratt, Chief Operating Officer at Redrow, said: “It’s disappointing to see output in new private housing down on the month across the industry – particularly as this is not something that we’re seeing at Redrow. Month on month figures can however be volatile and it is perhaps more encouraging to see a strong uplift in the annual figures which registered a rise of 4% year-on-year.
“Today’s data indicates that despite Brexit uncertainty, housebuilders are actively delivering more homes across the country to help meet demand and fulfil the Government’s housebuilding target.
“While Brexit continues to be the main priority for Boris Johnson, we are hopeful that matters related to housing will be addressed within the Queen’s Speech on Monday and that we may have some clarity on support for the sector. To ensure the economy remains as strong as possible after we leave the EU, the housing market must be high on the Government’s agenda and we absolutely don’t want to see today’s monthly decline continue in future months.”
New work output increased by £136 million in the three months to August 2019. This increase was driven by new housing, with both private and public housing experiencing increases of £92 million and £57 million respectively.
For new work, output decreased by £21 million in August 2019. This minimal decline comprised relatively minor increases or decreases across all types of work. Private commercial new work saw a relatively small increases of £23 million, while private new housing saw a relatively small decrease of £26 million.
In the three-month on three-month total all work series in August 2019 there was a small increase of 0.1% (£25 million). In contrast to the month-on-month growth in August 2019, we see growth in new work of 0.5% (£136 million).
The notable positive contributions came from private new housing, and public housing repair and maintenance, which increased by 1.0% (£92 million) and 4.4% (£80 million) respectively.
Clive Docwra, Managing Director of leading construction consulting and design agency McBains, said: “These latest figures show minimal growth overall but no-one in the industry will be getting too excited. The trends show that the industry is experiencing a mixed profile of monthly growth, with falls in March, April and June largely offset by increases in May, July and August. There was also a month-on-month decrease in new work of 0.2% in August.
“This fall in new work reflects the industry being at a crossroads as the Brexit situation remains unclear, with the longer-term picture one of investor restraint and a weakness in the housing market translating into a fall in the numbers of homes.”
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